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10 Best Long-Term Stocks To Buy According To Warren Buffett

In this article, we discuss 10 best long-term stocks to buy according to Warren Buffett. If you want to see more stocks in this selection, check out 5 Best Long-Term Stocks To Buy According To Warren Buffett

Berkshire Hathaway’s Warren Buffett is known to shake markets with his investment moves. In Q4 2022, Warren Buffett significantly reduced his investment in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) only a few months after disclosing a substantial stake. This rapid turnaround by the famous stock picker has spooked investors, and sentiment towards the chip giant has dampened as a result. Berkshire Hathaway reduced its ownership of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s American depositary receipts by 86% in the fourth quarter, according to the latest filings. If Berkshire sold the shares at the average price during that time, the sale of the stake would have raked in $3.7 billion. In the wake of this announcement, the stock prices of the world’s largest chip manufacturer declined by up to 4% in Taipei, contributing to widespread losses in the market.

Tony Huang, vice president at Taishin Securities Investment Advisory Co, told Bloomberg on February 15: 

“It’s surprising that Berkshire cut its holding so much in just a quarter, which differs from its past practice of long-term investment and continuing to add shares.”

While Berkshire Hathaway opted to sell its holdings in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), it added 333,856 shares to its position in Apple Inc. (NASDAQ:AAPL). For Q4 2022, Apple reported its worst revenue results for a holiday season in seven years.

Some of the best long-term stocks to buy according to Warren Buffett include The Coca-Cola Company (NYSE:KO), American Express Company (NYSE:AXP), and Bank of America Corporation (NYSE:BAC). 

Our Methodology

We selected the stocks from the Q4 portfolio of Berkshire which have been part of the fund’s portfolio for at least 5 years. Buffett has the largest stakes in the stocks listed below, in addition to them featuring on his portfolio consistently over the long-term. The list is ranked in the ascending order of Warren Buffett’s stake value in each firm. 

Best Long-Term Stocks To Buy According To Warren Buffett

10. General Motors Company (NYSE:GM)

Number of Hedge Fund Holders: 74

Berkshire’s Holding Period: 11 Years

Berkshire’s Stake Value: $1,682,000,000

General Motors Company (NYSE:GM) was founded in 1908 and is headquartered in Detroit, Michigan. The company designs, builds, and commercializes trucks, crossovers, cars, and automobile parts. General Motors Company (NYSE:GM) has been part of Warren Buffett’s portfolio for 11 years, and in Q4 2022, he owned 50 million shares worth $1.6 billion. 

On February 9, General Motors Company (NYSE:GM) and GLOBALFOUNDRIES Inc. (NASDAQ:GFS) made a joint announcement regarding a long-term agreement for the supply of chips. As per the terms of the agreement, GlobalFoundries will be producing chips for General Motors Company (NYSE:GM) at a plant in upstate New York. This exclusive agreement is expected to increase the production of chips in higher quantities, which will prevent shortages that the automaker has faced in recent years.

Barclays analyst Dan Levy on February 14 initiated coverage of General Motors Company (NYSE:GM) with an Equal Weight rating and a $46 price target.

According to Insider Monkey’s third quarter database, 74 hedge funds were long General Motors Company (NYSE:GM), compared to 75 funds in the last quarter. Harris Associates is a prominent stakeholder of the company, with 41.5 million shares worth $1.3 billion. 

Like The Coca-Cola Company (NYSE:KO), American Express Company (NYSE:AXP), and Bank of America Corporation (NYSE:BAC), General Motors Company (NYSE:GM) is one of the long-term stock picks of Warren Buffett.

Diamond Hill made the following comment about General Motors Company (NYSE:GM) in its Q3 2022 investor letter:

“Most recently, we initiated a position in General Motors Company (NYSE:GM), one of the largest automakers in the United States. Over the past several years, GM has taken steps necessary to focus the company on the most profitable segments and move into position to compete in an electrified and autonomous world. With the recent rise in interest rates there was a meaningful selloff in the auto industry, which presented us with an attractive entry point to a name we know well.”

9. Visa Inc. (NYSE:V)

Number of Hedge Fund Holders: 165

Berkshire’s Holding Period: 11 Years

Berkshire’s Stake Value: $1,723,880,290

Visa Inc. (NYSE:V) is a California-based multinational financial technology firm. It has been part of Warren Buffett’s portfolio for 11 years, and in the fourth quarter of 2022, the billionaire owned 8.3 million shares of Visa Inc. (NYSE:V) worth $1.7 billion, representing 0.57% of the total holdings. 

On January 26, ​​Visa Inc. (NYSE:V) reported an FQ1 non-GAAP EPS of $2.18 and a revenue of $7.9 billion, outperforming Wall Street estimates by $0.17 and $200 million, respectively. Payments volume for the three months ended December 31, 2022, increasing 7% over the prior year on a constant-dollar basis. 

Barclays analyst Ramsey El-Assal on January 29 raised the firm’s price target on ​​Visa Inc. (NYSE:V) to $270 from $266 and kept an Overweight rating on the shares. The new target represents management’s new FQ2 guidance and an unchanged fiscal 2023 outlook, the analyst told investors in a research note.

According to Insider Monkey’s data, 165 hedge funds were long ​​Visa Inc. (NYSE:V) at the end of September 2022, compared to 166 funds in the prior quarter. Chris Hohn’s TCI Fund Management is the leading stakeholder of the company, with approximately 20 million shares worth $3.5 billion. 

Here is what Distillate Capital has to say about Visa Inc. (NYSE:V) in its Q3 2022 investor letter:

“The largest sector change in the rebalance was a six-percentage point increase in technology. The biggest component of this increase was the introduction of a 4% weight in Apple, which is discussed further below. Offsetting this increased tech weight was a 3-percentage point decrease in industrials and a two-percentage point decline in health care. The other two largest purchases include Visa Inc. (NYSE:V) and Abbott Labs which likewise saw their valuations improve as their estimated free cash flows held up or improved while their enterprise values declined.”

8. VeriSign, Inc. (NASDAQ:VRSN)

Number of Hedge Fund Holders: 37

Berkshire’s Holding Period: 10 Years

Berkshire’s Stake Value: $2,632,839,535

VeriSign, Inc. (NASDAQ:VRSN) is a Virginia-based provider of domain name registry services and internet infrastructure for various recognized domain names worldwide. In Q4 2022, Berkshire Hathaway owned 12.8 million shares worth $2.6 billion, representing 0.88% of the total 13F securities. VeriSign, Inc. (NASDAQ:VRSN) has been part of the Berkshire portfolio since the last 10 years. 

On February 9, VeriSign, Inc. (NASDAQ:VRSN) reported a Q4 GAAP EPS of $1.70 and a revenue of $369 million, topping Wall Street estimates by $0.09 and $2.9 million, respectively. 

Ygal Arounian, an analyst at Citi, began coverage of VeriSign, Inc. (NASDAQ:VRSN) on December 13 and assigned it a Buy rating with a price target of $243. Despite the fact that the overall economic conditions are likely to continue to negatively impact consumers, which could affect the sector as a whole, the analyst believes that the challenging macro environment is already reflected in share performance and estimate revisions. As multiples for many companies are still relatively low, the analyst sees a favorable risk/reward potential for the internet industry in 2023.

According to Insider Monkey’s Q3 data, 37 hedge funds were long VeriSign, Inc. (NASDAQ:VRSN), compared to 35 funds in the prior quarter. Jim Simons’ Renaissance Technologies is a significant position holder in the company, with 3.5 million shares worth $606.7 million. 

Here is what Baron Asset Fund has to say about VeriSign, Inc. (NASDAQ:VRSN) in its Q4 2021 investor letter:

“Verisign, Inc. provides internet infrastructure services worldwide and is best known for its exclusive role managing the .com and .net domains, for which it receives annual fees from all those domain owners. Shares of Verisign gained after reporting strong revenue growth and operating margins that exceeded Wall Street forecasts. We continue to be positive on Verisign’s business, based on its strong competitive position, capacity for global growth in domain names, and its ongoing ability to generate substantial free cash flow.”

7. DaVita Inc. (NYSE:DVA)

Number of Hedge Fund Holders: 30

Berkshire’s Holding Period: 11 Years

Berkshire’s Stake Value: $2,695,256,212

DaVita Inc. (NYSE:DVA) is a Colorado-based company that provides kidney dialysis services for patients suffering from chronic kidney failure. In Q4 2022, Buffett owned 36 million shares of DaVita Inc. (NYSE:DVA) worth $2.7 billion, representing 0.90% of the total 13F securities. It is one of the long-term stock picks of Buffett, featuring on the Berkshire portfolio for 11 years. 

On November 1, Pito Chickering, an analyst at Deutsche Bank, lowered DaVita Inc. (NYSE:DVA)’s rating from Buy to Hold and set a new price target of $72, down from $97, following the release of its Q3 results. The analyst informed investors that healthcare service providers have been affected by inflationary pressures in 2022, and DaVita has managed these challenges exceptionally well. However, he attributes the downgrade to the issue of patients missing appointments at dialysis clinics in Q3 and the company’s guidance on this matter.

According to Insider Monkey’s data, 30 hedge funds were bullish on DaVita Inc. (NYSE:DVA) at the end of Q3 2022, compared to 28 funds in the last quarter. Jeffrey Gates’ Gates Capital Management held a prominent stake in the company, consisting of 1.46 million shares worth $121.20 million. 

Moon Capital made the following comment about DaVita Inc. (NYSE:DVA) in its Q4 2022 investor letter:

“During the fourth quarter, we purchased shares in DaVita Inc. (NYSE:DVA), a dialysis center operator. For those unfamiliar, kidney dialysis involves the critical removal of toxins, fluids and salts from the blood by artificial means. Roughly 500,000 patients receive kidney dialysis in the U.S., which requires a 3.5-hour treatment three times a week. The only alternatives to the treatments are a kidney transplant or potential fatality. Given the critical nature of its services, demand has little correlation with the overall economy, resulting in a highly recession resistant business.

The U.S. dialysis industry is highly concentrated, with two companies (DaVita and its competitor Fresenius) controlling a combined 80% of the $25 billion market. The dominance of this duopoly provides massive scale advantages, making it incredibly difficult for new entrants to gain profitable market share.

In the past, DaVita’s valuation has been penalized (we view unfairly) because the company generates a significant portion of its operating income from a small percentage of its patients. Of DaVita’s 200,000 patients, approximately 90% qualify for Medicare (or Medicaid), with the remaining 10% covered by a commercial insurance provider. While commercial insurers pay an average of $1,000 per treatment, the federal government’s pay rate for Medicare and Medicaid is only $275 – which is actually less than what it costs DVA to provide the treatment…”(Click here to read the full text)

6. Moody’s Corporation (NYSE:MCO)

Number of Hedge Fund Holders: 63

Berkshire’s Holding Period: 12 Years

Berkshire’s Stake Value: $6,873,493,546

Moody’s Corporation (NYSE:MCO) is a New York-based integrated risk assessment firm that publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations. Moody’s Corporation (NYSE:MCO) has been in the Berkshire portfolio for 12 years. Buffett owns a $6.8 billion position in the company. 

On January 31, Moody’s Corporation (NYSE:MCO) reported a Q4 non-GAAP EPS of $1.60, beating market estimates by $0.13. The revenue of $1.29 billion outperformed Wall Street consensus by $20 million. For FY2023, the company expects revenue to increase in the mid-to-high single digit percent range and adjusted diluted EPS of $9 to $9.50, versus a consensus of $9.28.

Ashish Sabadra, an analyst from RBC Capital, increased the target price for Moody’s Corporation (NYSE:MCO) on February 1 from $329 to $350 and maintained an Outperform rating on the company’s shares after it exceeded Q4 earnings expectations. In a research note to investors, the analyst said that the company’s FY23 guidance may be too cautious because of the anticipated strong recovery in issuance. Additionally, RBC Capital thinks that Moody’s projected buyback guidance for 2023 is conservative and will result in only about half of its free cash flows being returned to shareholders.

According to Insider Monkey’s third quarter database, 63 hedge funds were long Moody’s Corporation (NYSE:MCO), compared to 48 funds in the preceding quarter. Chris Hohn’s TCI Fund Management is a significant position holder in the company, with 8.2 million shares worth $2 billion. 

In addition to The Coca-Cola Company (NYSE:KO), American Express Company (NYSE:AXP), and Bank of America Corporation (NYSE:BAC), Moody’s Corporation (NYSE:MCO) has featured on the Berkshire portfolio for several years.  

Here is what Qualivian Investment Partners has to say about Moody’s Corporation (NYSE:MCO) in its Q2 2021 investor letter:

“Moody’s: Revenue, operating profit margins, and EPS all exceeded expectations, and annual guidance for these items (and for free cash flow) was raised. In MIS (Moody’s Investors Service) which houses the traditional ratings business, the outlook for debt issuance was raised for the remainder of the year, while MA (Moody’s Analytics) also came in ahead of expectations. The company leveraged strong revenue growth with strong operating profit margin improvement of 200 bps, with EPS coming in $0.22 ahead of consensus estimates. Management alluded to having interesting opportunities in their M&A pipeline, which we will have to assess when the time comes, but Moody’s management team has been very effective at allocating capital in the past toward value-creating bolt-on acquisitions, especially in their Moody’s Analytics business, a key growth driver for the company.”

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Disclosure: None. 10 Best Long-Term Stocks To Buy According To Warren Buffett is originally published on Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

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Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

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The “Toll Booth” Operator of the AI Energy Boom

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A New Dawn is Coming to U.S. Stocks

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Should I put my money in Artificial Intelligence?

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Click to continue reading…